HONG KONG (Dow Jones)–China Rongsheng Heavy Industries Group Holdings (1101.HK) has secured orders to construct offshore rigs for an overseas company, as part of efforts to diversify from its traditional shipbuilding business, which has been hit by the global economic downturn, a person familiar with the situation said Friday.

The person told Dow Jones Newswires that the new contracts for offshore rigs mark Rongsheng’s entry into the rig-building sector. The person added that an official announcement on the contract win is expected by the end of May, without giving further details.

Barclays Research on Friday estimated the market value of the orders at US$300 to US400 million.

The global shipping industry has entered a downturn because of slower international trade. China Rongsheng, which competes with China state-owned shipbuilding giants China Shipbuilding Industry Corp. and China State Shipbuilding Corp, posted a 2011 net profit of CNY1.72 billion, up a mere 0.1% on the previous year, as demand for ships slowed.

To diversify its sources of income, the company has been switching its focus from building dry bulk and container vessels to value-added vessels, such as liquefied natural gas carriers and large-scale offshore engineering equipment, demand for which remains strong despite the overall depressed shipbuilding industry.

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